Monday, June 16, 2014

Progress At Michter's, Not Much At Angel's Envy

When Diageo announced its decision to build a new distillery in Kentucky, near the hamlet of Bagdad, many were surprised by the relatively small scale of the proposed plant; a maximum annual capacity of about 1.8 million gallons, the equivalent of about 750,000 cases.

That's roughly the size of Medley, in Owensboro, recently acquired by Terrasentia, and scheduled to re-open in the next year or so. By contrast, the biggest distilleries in Kentucky and Tennessee produce ten times that much. Does that make Diageo's new facility a big micro or small macro?

Two Kentucky-based micro-producers, Michter's and Louisville Distilling (better known as Angel's Envy), have distilleries in the works that will produce up to a million gallons per year each, so about half the projected capacity of Bagdad.

Construction is well underway at Michter's in Shively. Foundations for the fermenters and other heavy tanks are about to be poured (picture above). The mills should be delivered next week and the fermenters go in mid-July. The rest of the tanks arrive in August and the column still should be ready by mid-September. Distilling should begin in the spring of 2015.

At Angel's Envy, not much has happened on the ground since the downtown Louisville Whiskey Row site was announced a year ago. Much continues to happen behind the scenes. The Hendersons prefer 'moving slowly' to 'stalled.'

Meanwhile, and on only a slightly smaller scale, New Riff Distillery in Northern Kentucky has begun production and Willett's, in Bardstown, has been up and running for two-and-a-half years. Few know about the distillery under construction in Hickman, Kentucky, that could go on line any day. It is about the size of New Riff and Willett's.

Much has been made recently of a 'whiskey shortage.' It's true that some producers have trouble keeping up with demand for certain products. Several of the majors, such as Beam Suntory, Wild Turkey, and Heaven Hill, finished their capacity expansions years ago, so supplies are increasing every month, even if they still lag behind demand. Although it will be years before all of this new production capacity affects supply, the building boom is unprecedented.